EC Digital Single Market: Industry reaction

A number of broadcast industry trade bodies and observers have commented on the European Commission’s Digital Single Market proposals.

Cable Europe welcomed the proposal to amend the Audiovisual Media Services Directive. The proposal, which forms a part of the Digital Single Market Strategy, reflects the changing nature of audiovisual services, of market players, technology and consumer behaviour. Having urged the Commission to consider an increasingly co-regulatory and self-regulatory approach in their position paper of February 2016, Cable Europe particularly supports the Commission’s proposals in the areas of:

The safeguarding of the Country of Origin principle;

Encouragement for platforms to invest in viewer protection technologies, through co- and self-regulatory regimes;

Caroline van Weede, Managing Director of Cable Europe, said: “Cable Europe’s members are at the forefront of developing and delivering converged audiovisual services. If industry is to continue to realise the ever-growing possibilities of technological advancement, regulation and policy must allow a competitive, market-driven approach to prevail.”

“We support the European Commission in the broadly deregulatory, de-minimis approach taken for a large part of the provisions which will ensure that old and new players can be subject to a similar regulatory environment. It’s imperative in such a fast-changing and frequently disrupted environment that innovation and investment are encouraged. However, we call upon the Institutions to move away from prescriptive, quota driven approaches and focus instead on incentivising the audiovisual industry, which ultimately reaps rewards for the Digital Society as a whole,” she stated.

John McVay, Chief Executive of UK independent producers’ body Pact, said that in light of the announcement on rules for geo-blocking and e-commerce as part of the Digital Single Market agenda, it was essential that policy makers heed the concerns about longer term plans for so called ‘cross border access’ to film and television content. “Due in the Autumn, the European Commission plans would erode the exclusive territorial exploitation of film and television rights, with film and TV producers and audiences across Europe losing out. A recent independent report found these plans would result in consumer welfare losses of €9.3 billion a year as a result of consumers losing access to content they currently enjoy, being charged more, or being priced out completely. The report also predicted a drastic drop in investment in new content and revenue losses for producers of up to €8.2bn. We all want to develop a stronger digital economy for film and television. But the Commission must work with, not against the industry, to deliver for consumers,” he declared.

David Johnson, CEO at Compact Media, said the announcement raised some issues, particularly around the proposed quotas. “While the quota proposal may deliver more investment into European content that could result in further growth, it could also end up being a diversion with the purchase of cheap content merely to meet the quota requirements, which is not good for anyone.”

“For the benefit of the consumer and the European content industry any investment in European content must be an investment in good content rather than just a tick box exercise just to qualify as European. We have had enough ‘Euro pudding’ content in the past where producers have compromised their vision to pick up investment or to qualify as European and the result has been unwatchable rather than unmissable.”

“Viewer behaviour seems to be clear that the demand is for a mix of good local programming as well as Hollywood or global blockbusters. Services like Netflix and Amazon already include some local programming. Ultimately the ability of Europe to provide a strong alternative will rest with its success in creating great programmes that people want to watch.”

The Association of Commercial Television described the Commission’s proposed revisions to the AVMS Directive as “a step in the right direction” to adapt the legal framework to the current and future media landscape. “However, commercial broadcasters are concerned that these do not sufficiently reflect the radically changing media landscape, where viewers are watching content increasingly through a widening range of online, on-demand platforms. In order for commercial broadcasters to continue to finance and produce high quality European content, they need to be able to compete freely and fairly with all content providers regardless of platform.”

“While our members welcome the proposals to deregulate some advertising rules such as those governing Product Placement and Sponsorship, and to protect the Country of Origin principle as a key facilitator of cross-border distribution, many rules remain which apply to some platforms and not others. Further deregulation is necessary to enable fair competition for all media services across different platforms.”

“Commercial broadcasters play a fundamental role in funding and promoting cultural diversity – a role the EU should value in the current and forthcoming global marketplace. Regarding European programme quota rules for non-linear services, our members believe that investment in European works should be demand driven. European commercial broadcasters already produce vast amounts of European content in response to consumer demand which they make available across a wide range of linear and on-demand platforms.”

“The deletion of the provisions on accessibility with reference to the proposed European Accessibility Act is also regrettable. We need a coherent legislative approach that factors in the specificities of the sector and strikes the right balance between commercial broadcasters’ long standing commitment to helping and supporting disabled customers and the on-going economic viability of AV digital services.”

“We look forward to working with the European Parliament and Member States to come to a result that reflects a long-term vision for all players offering AV services, ensuring significantly less detailed but equal level of regulation,” it concluded.

Member of egta – TV and radio sales houses across Europe – broadly welcomed the proposal as a positive move towards a more balanced set of rules for all audiovisual stakeholders.

egta president Jan Isenbart commented: “the new proposal delivers some much needed flexibility to the rules on commercial communications, and the Commission should be applauded for doing so. However, there are still too many specific rules that only apply to linear broadcasters. We believe that more ambition could still ensure a more level playing field, enabling the sustainable production and financing of original, premium European content.”

Katty Roberfroid, egta Director General, added: “since the beginning of the consultation process we have called for greater flexibility and simplification regarding the advertising rules for European broadcasters. We are pleased to see that the Commission has heard industry’s calls on a number of issues; nonetheless there is still room for improvement and we look forward to continuing our dialogue with the European institutions moving forward.”

Ted Shapiro, Wiggin Partner and Head of the firm’s Brussels office, noted that the EC’s proposals on geo-blocking does not cover AV services (and indeed other copyright services), suggesting that these have not necessarily been spared but rather are subject to separate initiatives (copyright specific legislation and competition law – pay-TV investigation). The latter looks at a quota in the on-demand space and takes a step toward regulating platforms such as YouTube.

“The draft Regulation on Geo-Blocking is not that surprising. It was never meant to cover audiovisual and other copyright content but that does not mean copyright is being spared; there are separate initiatives: the Proposed Portability Regulation, the second wave of copyright legislation coming this fall (supposedly) and competition law, including in particular the Pay-TV case,” noted Shapiro.

“The Proposal for revised Directive on AVMS’s breaks new ground as the Commission seeks to create some regulatory parity for online services who rely on liability privileges in the E-Commerce Directive,” he added.

The Society of Audiovisual Authors (SAA) welcomed the European Commission’s proposal for an amending Directive of the Audiovisual Media Services Directive (AVMSD), suggesting it was a first step but an important milestone in the development of the EU’s cultural policy. It called on the Council and European Parliament to be even more ambitious.

SAA fully supports two proposed revisions: the requirement for VoD services to include European works in their catalogues and ensure their visibility; and, in order to put an end to unfair competition, the capacity for Member States to apply the same financial contribution rules to services based outside their borders but targeting their citizens.

SAA is convinced that these two proposals will help create a fair and balanced market for both European works and Europe-based distributors. Regulatory forum shopping, used by some distributors when establishing headquarters in countries with weaker audiovisual regulation, should no longer be a competitive advantage.

SAA calls on the Member States and MEPs to consolidate these commitments and be more ambitious on the promotion and financing of European works. In particular, the Directive should set higher targets for the presence of European works on VOD platforms. The proposed 20 per cent catalogue quota is insufficient. Broadcasters are required to have 50 per cent of European content and, according to a recent study by the European Audiovisual Observatory, VOD platform catalogues are already made up of 30 per cent European works.

SAA also wants the Council and European Parliament to be vigilant that the amending Directive does not weaken the integrity of audiovisual works and the moral rights of their authors. Among the proposed relaxation of advertising rules, SAA opposes the possibility of interrupting films every 20 minutes.

Chair of the SAA board of Directors, Barbara Hayes said: “The quotas in the AVMS Directive have helped European drama to breakthrough outside of national borders – making Europe’s audiovisual sector more competitive internationally and demonstrating our talented screenwriters and directors. Their extension to video on demand services is vital.”

SAA Executive Director, Cécile Despringre said: “SAA is resolutely supportive of any coherent regulation that creates a level playing field for audiovisual services. Operators in the same market need to be subject to the same rules, including on financial contributions.”

John Enser, a Partner in Olswang’s media practice, said that while the existing AVMS Regulation included a general obligation for Member States to ensure that on-demand services promote EU content, it gave them a broad discretion as to how to deliver that obligation. Most countries have not introduced these quotas, but these new rules will obligate almost all on-demand services to include at least 20% European works in their catalogues. In addition to this, the proposals also now mandate that Member States ensure prominence of European works. In an on-demand environment, the prominence obligation is likely to prove highly controversial and subjective – it will be interesting to see how this is enforced, and whether a ‘European works’ genre in a list of genres will be enough. Even more radical, and clearly driven by French objections to (in particular) Netflix, is the loosening of the COO principle to allow for contributions to national content investment funds. Given that COO is such a cornerstone of the Directive, there have been widely articulated concerns that once the principle is breached in one area, it may lead to other countries looking for special treatment.”